To get a complete and transparent understanding of the concept of selling and distribution overheads, it is important to just know the basic point that selling and distribution overheads are a part of cost accounting. Cost accounting is basically a well-ordered process of recording and evaluating the expenses or costs incurred in completion of an activity.
Now the next question arises that what exactly are selling and distribution overheads? And why selling and distribution overheads are considered a part of cost accounting? Let me elaborate first definition of selling and distribution overheads. More and more students are opting for online homework help for their selling and distribution overheads homework answers.
Selling overhead â€“ Definition
Selling overheads can be described as those expenses which are incurred by businesses to elevate the sales and withhold their customers. Indirect expenses that a company bears to initiate and cultivate the demand for any product till the phase of securing orders.
Distribution overheads â€“ Definition
Distribution overhead, on the other hand, is the expenses incurred by a business regarding completion of an order. The expenses a business bears for warehousing and storing the goods, packaging of goods then finally making an arrangement delivery of goods to customers.
Selling overhead is different from distribution overhead
Selling and distribution of products, both are a part of marketing activity, where selling refers to making a sale of any product while distribution refers to the delivery of that product. Similarly, selling overhead is also different from distribution overhead, donâ€™t get confused between these.
Here we are clarifying the difference between these two terms, selling overhead basically is the expense made by business before the sale of the product such as for promotion of that particular product. While distribution expense begins strictly after the order for a product has been placed and ends when products get dispatched.
Hence, these terms are completely different from each other, but both are part of cost accounting as in both cases, cost is incurred by businesses.
Examples of selling overheads
- Cost of indirect material that includes printing cost and stationary, cost of advertisements, Posters, Catalogues.
- Cost of indirect workforce that includes salaries and commission of salesman and sales representatives.
- Indirect costs like Expenses of showroom, rent, insurance, travelling expenses, entertainment cost,
Examples of Distribution overheads
- Cost of indirect material that includes packaging cost, oiling, greasing and other spare parts for repairing vehicles.
- Cost of indirect workforce that includes wages of workers, drivers and dispatch task force,
- Indirect costs like go down cost including its rent, freight, and other transport charges.
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